The BOE has published the agreements signed on 31 July between Housing, Economy and the Official Credit Institute (ICO), which will mobilise 6,000 million euros to increase the stock of affordable rental housing.

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Financial institutions can now join the line of loans to developers to build affordable rental housing

The Official State Gazette (BOE) today published the agreements between the Ministry of Housing and Urban Agenda and the Official Credit Institute (ICO), which launched the ICO’s line of loans and guarantees for the promotion of affordable rental social housing. Specifically, these are the agreements for the implementation of the “Facility for the Promotion of Social Housing” and for the management of guarantees on behalf of the State for the “Facility for the promotion of social housing”.

These lines of aid mobilise 6 billion euros through the ICO for the construction of affordable rental housing. These 6,000 million euros are divided into two lines of investment: firstly, 4,000 million euros in loans for public and private developers, from the Addendum to the Recovery, Transformation and Resilience Plan; and secondly, a line of 2,000 million euros that will guarantee up to 50% of these loans, promoted by the Spanish Government and managed through the ICO.

The agreement was signed at the headquarters of the Ministry of Housing and the Urban Agenda on 31 July and presided over by the President of the Government, Pedro Sánchez. The Minister of Housing and the Urban Agenda, Isabel Rodríguez; the Minister of Economy, Trade and Enterprise, Carlos Cuerpo; the Secretary of State for Housing and the Urban Agenda, David Lucas; and the President of ICO, José Carlos García de Quevedo, signed the documents that gave the definitive impetus to these lines of aid.

The President of the Government highlighted the importance of the investment figure of 6,000 million euros in these agreements, which “gives a good account of the ambition of this initiative”. In addition, 4 billion euros are linked to the addendum to the Recovery Plan, which for the head of the Executive “demonstrates the relevance of these European funds for the day-to-day life, not only of a sector as important as the construction sector in our country, but also of the citizens”. Finally, the President highlighted his government’s commitment to housing and recalled his desire to “turn this legislature into the legislature of housing”, which will result in “the construction of that fifth pillar of the Welfare State, which is access to housing”, he concluded.

ICO loans “Facility for the promotion of social housing”.
The 4,000 million euro line of loans to public and private developers is aimed at projects that increase the stock of social rental or energy-efficient affordable housing via new construction or refurbishment and also includes financing for the purchase of land or the building.

The agreement signed between the Ministry of Housing and Urban Agenda, the Ministry of Economy, Trade and Enterprise and the ICO provides for the financing of operations from 1 January 2022 that comply with the conditions established for access to the loan. These loans must be requested before 1 June 2026 and formalised before 31 August 2026.

There will be two access routes to project financing, which will be distributed according to demand. Initially, the ICO is expected to mobilise 2,000 million euros and the financial institutions participating in the loan line will mobilise the remaining 2,000 million euros. However, this distribution may vary depending on demand.

If the ICO is the entity granting the loan, the operation will only require verification of compliance with the requirements and the risk of the operation for the subsequent granting of the loan. On the other hand, the financial institutions will analyse the risk of the operation under their risk policy, since it is the institution that assumes the risk of non-payment. If the financial institutions are used, once the institution and the promoter agree on the loan and it is granted, the ICO will transfer the amount of the operation to the financial institution so that it can lend it to the promoter.

Conditions of access to the loans
The final recipient must apply for this “social housing” loan through their financial institution or directly with the ICO. They will be used for projects aimed at increasing the stock of social rental housing or rehabilitation of existing housing, including actions from the Programme for the construction of affordable rental housing in energy-efficient buildings of the Recovery Plan, new housing on public and private land, the rehabilitation of buildings to be used for affordable or social rental, the purchase of land for subsequent construction or assets owned by SAREB.

Housing built through these loans will have to be destined for social or affordable renting, or assigned for such use, for a minimum period of 50 years.

Projects will also have to be completed on different dates, depending on the type of project financed. Specifically, the funding of the Programme for the construction of the Recovery Plan must be completed by 30 June 2026. The construction of buildings on developed land within 4 years of the formalisation of the loan, with the possibility of extending it for a further 2 years. In the case of undeveloped land, the term is 8 years, with the possibility of requesting an extension of 4 years. And 4 years, with the possibility of requesting an extension of 2 more years, in the case of rehabilitation.

The financed projects have to comply with climate requirements in which the constructed buildings must achieve a consumption of less than 20% of primary energy than that established for nearly zero-energy buildings according to national guidelines, and the rehabilitated buildings must reduce at least 30% of non-renewable primary energy.

2 billion euros in loan guarantees
On 27 December 2023, the Council of Ministers approved the creation of a line of guarantees to cover, on behalf of the State, financing to increase the stock of social or affordable rental housing, as well as to improve the existing stock.

The guarantee covers up to 50% of the loan capital and will be managed by the ICO. The guarantee is free of charge and is granted automatically once the loan is granted, whether it is accessed through the ICO or from a financial institution participating in the financing line.

The guarantee granted by the Ministry of Housing and the Urban Agenda is valid for the same period as the loan repayment period or, if longer, 30 years.